Porsche AG, led by new CEO Michael Leiters, is planning to simplify and streamline its vehicle portfolio and increase cooperation within Volkswagen AG. This strategic shift is aimed at boosting profit margins, which have been negatively affected by US tariffs and a slump in demand from the Chinese market. Leiters is expected to present these plans to shareholders during Porsche's annual meeting on Tuesday.
The move reflects a broader initiative across the Volkswagen Group to reduce complexity and improve financial returns. Porsche currently offers approximately 85 variants across six main models. Leiters, who assumed the CEO role in January, stated that the company's portfolio has become overly complex compared to its competitors, and that reducing the number of competing models will significantly enhance capital efficiency.
Porsche's profitability has been under pressure, with the company forecasting an operating profit margin of between 5.5% and 7.5% for the current year. This is notably lower than the double-digit margins investors typically associate with the brand. The challenges faced by Porsche are mirrored across the European premium automotive sector, as seen with BMW cutting its automotive margin forecasts to as low as 1% due to declining demand and geopolitical pressures.
To further cut costs, Porsche intends to reduce its production capacity from the 280,000 cars sold last year, indicating that the company aims to generate more profit from fewer vehicles. Leiters is also pursuing a second cost-cutting package and has begun discussions with trade unions, including negotiations on job cuts. Porsche had previously announced plans to axe 1,900 jobs and laid off 2,000 temporary workers last year. This streamlining effort will also involve closer collaboration with sister company Audi, though the entry-level 718 series is expected to continue.
